Odds are mounting that de-risking/deleveraging dynamics attain destabilizing momentum. Many hedge funds now have losses for the year, which forces managers to take down both risk and leverage in anticipation of year-end outflows. I believe deleveraging is having a growing impact on marketplace liquidity around the world – and across asset classes. Yields are rising and spreads are widening throughout global fixed-income. Unstable equities markets around the globe are indicating a fragile liquidity backdrop. And this week’s $2.68 (4.3%) drop in WTI has all the appearances of a major leveraged speculating community panic liquidation (portending challenges for the – to this point – resilient junk bond market).

Bloomberg this week posed a most-pertinent question: “When will funding squeezes impact the Fed?” The market continues to focus on building rate pressures throughout the money markets, with added concern now that year-end funding issues are coming to the fore. The system is, after all, in its first experimental unwind (QT or “quantitative tightening”) of some of the Fed’s QE holdings. Market analysis is only further challenged by the enormous issuance of T-bills necessary to fund ballooning fiscal deficits. Three-month LIBOR added another two basis points this week to a decade high 2.61%. The effective Fed Funds rate (2.20%) remains stubbornly near the top of the Fed’s target range (2-2.25%). There are also hints of waning liquidity in the mortgage marketplace. Furthermore, ebbing foreign demand at Treasury auctions is an increasing concern.

At this point, conventional analysis has yet to factor in the liquidity impact from speculative deleveraging – in terms of money market rates, fixed-income yields and the risk markets more generally. The degree to which speculative leverage has accumulated over this long cycle is The Momentous Unknowable. Indeed, there’s a portentous lack of transparency for something of such vital importance. For the most part, the contemporary realm of speculative leveraging operates outside of traditional banking. As such, this issue was just too convenient for the Bernanke Fed and global central bankers to ignore as they collapsed borrowing costs, flooded the world with liquidity and committed to market liquidity backstops.

At this point, I seriously doubt the Fed has a solid grasp of the (direct and indirect) sources of the Trillions of global liquidity that have flooded into U.S. securities and asset markets over the past decade. I take them at their word that they don’t discern the degree of leverage that would typically indicate a Bubble. Yet this has been the most atypical of global Bubbles. I am not convinced the Fed knows where to look for the leverage most germane to today’s global Bubble. And, I’m compelled to add, the whole world seems oblivious. Speculative deleveraging is not on the Fed’s radar, and this is a problem for the markets.

The majority voted to kill off California farms by voting for Gavin Newsom
Cutting off water to Calif Farmers. They did enough damage on Central Cal when Pelosi gave water to a crooks who raised prices turning farms into dead trees and dust storms.
This is progressiveness.

There is, however, a very serious problem brewing: Systemic risk expands exponentially during the “Terminal Phase” of excess, as rising quantities of increasingly risky loans imperil the entire financial system. The past two years have seen extremely rapid (speculative “blow-off”) Credit growth in two particularly problematic sectors: lending against equities and apartments – both at inflated prices. There will come a point when the market begins to question the validity of Beijing’s banking system fortification. This type of waning confidence could initially manifest in the currency market.

I have a feeling that the recent employment reports may be suggesting inflation may be coming back with a vengeance. Crude oil has dropped about 20% as we transition to winter blends and heating oil season. When crude oil turns around in 2019, things may get exciting . This rig is currently operating on my wife’s family farm. I believe if it hits good production , I will be banished to a veterans home and she will become a member of the geriatric jet set. wish me luck.

I bought my last 100 shares on Friday @ $6.86 for a total of 1000 shares. I will go back to buying phiz now. If the democrats start doing something stupid, the volatility in all markets will become intense. Tip toeing through the minefield will be the order of the day for months.

It did not, however, take long for the joyful “gridlock is good” rally to face a reality check. The President’s tweet: “If the Democrats think they are going to waste Taxpayer Money investigating us at the House level, then we will likewise be forced to consider investigating them for all of the leaks of Classified Information, and much else, at the Senate level. Two can play that game!” NYT: “Jeff Sessions is Forced Out as Attorney General as Trump Installs Loyalist.” And then came Friday’s (post-election) barbs from the director of the White House’s National Trade Council:

Wednesday provided a good example of news and analysis following market direction. Stocks were up, so election results must have been positive. I would tend to see Wednesday trading as heavily impacted by the unwind of hedges – and yet another short squeeze. After trading as high as 20.6 in Tuesday trading, the VIX (equities volatility) index ended Wednesday’s session at 16.36, an almost one-month low.
Market weakness in the weeks leading up to the midterms created an unusual backdrop. A pivotal election combined with a vulnerable market backdrop ensured a double-dose of hedging activity heading into Tuesday. And with the election having avoided “tail risk” outcomes (blue wave with Democratic control of both houses, or Republicans maintaining full control), post-election trading saw a significant reversal of risk hedges and bearish speculations.

*The large specs reduced their long positions by 2,936 contracts and reduced their shorts by 8,936 contracts.

*The commercials decreased their longs by 3,620 contracts and increased their shorts by 5,911 contracts.

*The small specs increased their longs by 480 contracts and reduced their shorts by 3,051 contracts.

Gold

*The large specs increased their long positions by 387 contracts and decreased their shorts by 5,445 contracts.

*The commercials increased their longs by 8,040 contracts and increased their shorts by 14,971.

*The small specs reduced their longs by 255 contracts and reduced their shorts by 1,354 contracts.

What stands out in gold is how short the commercials (Gold Cartel) are against both the large and small specs. In silver it has the commercials short around 20,000 contracts against 22,000 contracts of small spec longs.

I would only make one addition ; add lazy and ignorant before poor . All too often corrupt as well .

I grew up poor by today’s standards . My father never missed a day’s work as a licensed operating engineer , but we lived in a one car garage for four years as he built our home evenings and weekends . When finished it was a showpiece .

I always got the best grades in my classes . A neighborhood boy who was from a family of wealth and influence ( grandson of an ambassador to Japan ) was always in second place . That would rankle his father who saw this ragamuffin always ahead of his pedigreed offspring . Any time he saw me playing with his son he would say ” Well , Alexander , How’s the ragtime band ? ” . ( I wore hand me down clothes from family friends who had a son a few years older than me , and were well worn , but clean and functional ).

I would not trade the example of my parents for all of Soros’ riches .

the RAINS will come and wash the top Soil into the SEA,then the FISH will leave because of all the sediment in the water ….FOOD will become scarce and more difficult Fishing will cease withen 20 miles of the coast…How do I know all this ..Iv seen this movie before its called HAITI …Its what happens when you allow the POOR or the Stupid to make decisions about Policy …They are too short sighted to be put in charge of anything..

With all these conditions in place, it was no surprise that volatility reared its ugly head again last month, wreaking havoc on investor performance while also causing significant damage to the technical health of markets. Asset bubbles burst when severe losses pile up quickly, triggering the inevitable transition to new patterns of behavior. As the broken long-term trend lines below illustrate,==

even the odious but charming Arthur Godfrey…Today we see the evolved mono-personlity–everyone plugged into the internet–no rich inner life, made up of organic experience in a web of connected human relations..just look at the marvelous character actors in the films…of the 30s and 40s–even the 50s–we won’t have any Gabby Hayes emerge today from a generation that has grown up peering into a cell phone 24/7…

due to Stupid California Laws preventing mowing of dead weeds and clearing of DEAD wood in bone dry SO.CAL on all public Lands ….

I spent some time in this very area in Malibu and ZUMA BEACH one 4th of JULY ..it was a beautiful area and a perfect Beach as was Pepperdine University Grounds …How can students possible be serious about studies I thought… when its sunny and Surfs up in such a beautiful University with a view of the BEACH ! NOT POSSIBLE !

There is no way they can be distinguished from Phoney votes filled in blanks after the election was held..No Names on the votes ! simply scratches on blank ballots not counted or identifiable in any way ..Its just like a violation of any LAW ..Bad things happen when you dont obey the LAW ,its no different then running a red Light ….Bad things happen and vote fraud will not be allowed.Unlimited ballots may have been printed without identifiable limitations on how many voters there were. My own ballot once placed into the counting machine contained NO identifiable distinguishing characters ,no name on it ,no number of how many were printed ..an absurd way to vote…They identified me prior to getting access to the Ballot,but after no ballot was distinguishable from any other…making recounts USELESS without a chain of custody by armed guards from both sides including independent observers to prevent collusion .

Charges of Russian collusion are just a applicable at every voting booth in Florida…..Stupid is as stupid does….Its nuts ! to vote this way without voter Id and without names on Ballots or numbers tied to an eligibility ID .How do they know the RUSSIANS didnt vote in Florida

Amidst all the #5G hype, it’s rare to find a blunt statement like this one from Eluxe Magazine’s Jody McCutcheon: “Until now mobile broadband networks have been designed to meet the needs of people. But 5G has been created with machines’ needs in mind, offering low-latency, high-efficiency data transfer…. We humans won’t notice the difference [in data transfer speeds], but it will permit machines to achieve near-seamless communication. Which in itself may open a whole Pandora’s box of trouble for us – and our planet.”